Today, the Corpus Christi Court of Appeals issued a major decision in TCEQ v. Texas Farm Bureau regarding surface water rights in Texas. [Read full opinion here.]

Background

In late 2012, Dow Chemical Company, a water rights holder on the Brazos River notified the TCEQ it was making a “priority call” on the Brazos.  Essentially, this means that Dow requested TCEQ to curtail water withdrawals from users with water rights junior to Dow, whose right was granted in 1942.  The TCEQ issued a priority call, suspending the use of water rights with a date junior to Dow’s.  He made an exception, however, for water rights held by municipal water supplies or those used for electric power generation.  Thus, all water rights holders with permits obtained after 1942 were cut off, except for municipal water suppliers and electric power generators.  Not surprisingly, this significantly impacted area farmers.  In fact, of the 845 suspended water rights, 716 were permits issued for irrigation.

In December, 2012, the Texas Farm Bureau and some individual water rights holders who had been curtailed filed suit against the TCEQ.  The plaintiffs argued that in issuing this priority call, the TCEQ violated the Texas Water Code by not complying with prior appropriation.  Essentially, the plaintiffs’ position is that while the TCEQ had the power to issue a priority call and curtail junior users, they could not cherry pick certain types of junior users to whom the order would not apply.  The TCEQ argued that they had the authority to issue this order based upon the Texas Water Code.

The trial court sided with the plaintiffs, holding that TCEQ lacked the authority to make these exceptions to the prior appropriation doctrine under the Water Code.  The TCEQ then appealed and the case was assigned to the Corpus Christi Court of Appeals.

Applicable Law

Initially, it is important to understand that surface water in Texas is owned by the State, which may grant water right permits for beneficial use.  Additionally, surface water is governed by the doctrine of prior appropriation.  This doctrine essentially means first come, first served.  This means that a senior water rights holder (one with an older permit) will receive all of his or her water, before a junior water rights holder receives any.  For a more detailed discussion of Texas surface water law, click here.

Additionally, there are two key statutory provisions important to understanding the Court of Appeals’ opinion.

Texas Water Code Section 11.053:

(a) During a period of drought or other emergency shortage of water, as defined by commission rule, or the executive director by order may, in accordance with the priority of water rights established by Section 11.027 (language set forth below in this blog):  (1) temporarily suspend the right of any person who holds a water right to use the water; and (2) temporarily adjust the diversions of water by water rights holders.

(b)  The executive director in ordering a suspension or adjustment under this Section shall ensure than an action taken:  (1) maximizes the beneficial use of water; (2) minimizes the impact on water rights holders; (2) prevents the waste of water; (4) takes into consideration the efforts of the affected water rights holders to develop and implement water conservation plans and drought contingency plans in accordance with this chapter; (5) To the greatest extent practicable, conforms to the order or preferences established by Section 11.024; and (6) does not require the release of water that, at the time the order is issued, is lawfully stored in a reservoir under water rights associated with the reservoir.

Texas Water Code Section 11.027:  As between appropriators, the first in time is the first in right.

Parties Arguments

The plaintiffs in this case argued that the Water Code Section 11.053(a) makes clear that while the TCEQ has the authority to suspend water rights in the time drought, it must do so in accordance with the prior appropriation doctrine.  Specifically, they relied upon the language in 11.053(a) that says the TCEQ may suspend rights “in accordance with the priority of water rights established by 11.027,” which provides that as between appropriators, first in time is first in right.  By refusing to curtail junior water rights for municipalities and power generators, the TCEQ violated this statute.

The TCEQ argued that it was given the power to protect the public health, safety, and welfare, and issued its order, including the exceptions, for that purpose.  Specifically, TCEQ pointed to Water Code Section 11.053(b)’s provision that requires it to consider various factors beyond mere permit dates in issuing a curtailment order.

Court of Appeals Opinion

The Court of Appeals sided with the plaintiffs in this case, finding that the TCEQ order violated its statutory authority.  The court held that 11.053 unambiguously requires TCEQ to comply with the doctrine of prior appropriation when issuing curtailment orders in a drought.  “A plain reading of the statute indicates that the Legislature intended for the priority system established under section 11.027 to take precedence in any type of suspension or adjustment.”

Additionally, the court pointed out that there is another, separate statutory scheme that would allow the TCEQ to suspend water rights in emergency situations based on urgent public health and safety concerns.  Texas Water Code 11.139, which can be read here, requires several steps by taken by the TCEQ and compensation be paid to those water rights holders impacted by the curtailment.  TCEQ did not rely upon this statute in issuing its priority call on the Brazos.

In conclusion, the Court of Appeals states that while it recognizes the TCEQ’s authority to manage the state’s scarce water resources, their authority may not exceed the express legislative instructions given in 11.053, which requires compliance with the first in time, first in right principal.

Why This Matters

This case has been closely watched by water law attorneys across Texas as it defines the parameters that the TCEQ must follow in issuing drought orders, which could potentially impact any surface water rights holder in Texas at some point.  Both the trial court and Court of Appeals have found that in issuing these orders under Section 11.053, the TCEQ must adhere to priority.  We will have to wait and see if the TCEQ will appeal this decision to the Texas Supreme Court.